Directions(1-5):Read the following passage and answer the questions that follow.
Consolidation in India’s overcrowded telecommunications industry was perhaps inevitable. What is interesting though is that the current wave of mergers and acquisitions, which started in November 2015 with Reliance Communications’ agreement to acquire Sistema’s Indian wireless business, has gained considerable momentum over the last 15 months with several more announcements — of deals struck or confirmation of ongoing merger negotiations — having been made. That the commercial start of services from the latest entrant, Reliance Jio, has been coterminous with this latest round of consolidation is not a simple coincidence. Given what some of its competitors have referred to as Jio’s “predatory” approach to pricing, the industry has found itself buffeted on the one hand by a sharp decline in earnings, and on the other by the high cost of servicing the debt that had helped incumbent operators bid for and acquire the much needed wireless spectrum at the government’s auction of airwaves. It is this financial bind that the industry finds itself in that Sunil Mittal, Bharti Airtel founder and chairman, alluded to at the Mobile World Congress in Barcelona this week when he said that the return on capital deployed had dipped to low single-digit levels, making investment in the business unviable. Investors, he is reported to have quipped, would be better off putting their money in a bank and playing golf.
This is a far cry from the situation a little more than five years ago when as many as 12 private players jostled cheek by jowl with the two state-run telephone operators, BSNL and MTNL, as they vied for a share of the country’s 893.8 million wireless subscribers as of December 2011. And while the market had expanded to almost 1.13 billion subscribers as of December 2016, the number of non-state mobile services providers had shrunk to 10, inclusive of Reliance Jio. With seven of the nine either in the process of being acquired or merged, or in talks to negotiate a deal, the industry is now finally poised to coalesce into four large private sector entities, a welcome development both from the industry and government perspective. Still, size alone may not guarantee the enlarged companies’ good health, especially given the ongoing fierce battle for market share. That the seriousness of the situation has not been lost on the Telecom Commission is best underscored by the fact that it has asked the Telecom Regulatory Authority of India to ensure orderly growth in the sector. After all, a bruising and protracted price war, while certainly good for the consumers, is bound to extract a heavy price on the service providers’ financials, notwithstanding the deep pockets that the merged entities may command. That in turn risks further eroding the revenue the Centre earns from license fees and spectrum usage charges, a fact cited by the Telecom Commission in its latest missive to TRAI. It is in no one’s interest to kill the goose that lays the golden eggs.
- The conclusion that we can draw from the passage is
Due to all mobile companies being in great debt, merger is the best optionThe merger of mobile services companies would be a welcome developmentThe price war is brutal for the consumers as well the service providersAll of the aboveNone of theseOption B
- What according to the passage is the reason for the beset of the industry?
A decline in the earningsrepayment of loansmergers between companiesBoth A & BNone of theseOption D
Refer to “the industry has found itself buffeted on the one hand by a sharp decline in earnings, and on the other by the high cost of servicing the debt”. - “The return on investment in the telecom industry is still as lucrative as it was in its nascent stage.” This statement is
Definitely trueDefinitely FalseProbably trueProbably FalseCan’t sayOption B
Refer to “the return on capital deployed had dipped to low single-digit levels, making investment in the business unviable. Investors, he is reported to have quipped, would be better off putting their money in a bank and playing golf.” - Choose the word/group of words which is most similar in meaning to the word/ group of word ‘vied’ as used in passage.
RecommencedAssimilatedCompetedConstructedNone of theseOption C
vie means to compete. - Choose the word/group of words which is most opposite in meaning to the word/ group of word ‘coalesce’ as used in passage.
ConvergeAmalgamateCongregateCleaveNone of theseOption D
‘Coalesce’ means to merge and cleave means to divide or split. - As per the new budget, individuals earning under which of the following brackets will not have to pay any income tax?
Above ₹ 2.5 LakhBelow ₹ 5 LakhUp to ₹ 5 LakhUp to ₹ 4 lakhA & C combinedOption D
Refer to, New Tax rate “coupled with the existing deduction available under section 80C of the act will ensure that individuals won’t have to pay any income tax up to an income of ₹ 4 lakh”. - The above passage mentions the effect of budget on
Salaried PeopleMSMEsLarge IndustriesEntire CountryOnly A & BOption E
1st paragraph talks about the impact of budget on salaried people and the second paragraph talks about the effect on MSMEs. - Which of the following, according to the passage, have been increased in the new budget?
Tax rate for income range between ₹ 2.5 lakh and ₹ 5 lakhThreshold for tax audit complianceTax rate of MSMEs having turnover of less than ₹50 croreTax rate for small companies having turnover less than ₹2 croreAll of the aboveOption B
The threshold for mandatory tax audit compliance has been raised to ₹2 crore, which would ease the compliance burden. - The purpose of the government to introduce the budget as mentioned in the above passage is to
Boost digitizationPlease the citizens of the countryReward compliant tax payersPromote small scale industriesAll of the aboveOption C
Refer to “All of these measures suggest that with this Budget, the government has sought to reward those honest and compliant tax payers – whether the common man or MSMEs – to ensure inclusive growth and development.” - “All of 80C deductions could be utilised by the low-income group taxpayers”
According to the passage, this statement isDefinitely TrueProbably TrueDefinitely FalseProbably FalseCan’t be determinedOption E
Refer to “we may not know how much of such 80C deductions could be utilised by the low-income group taxpayers”
Directions(6-10):Read the following passage and answer the questions that follow.
This year’s budget proved the phrase “expect the unexpected” from a personal tax perspective. There was much speculation until the budget day regarding reduction in slab rates and other sops for the salaried class. However, the Finance Minister came up with a simple, yet impactful set of proposals to please the common man. The existing tax rate of 10% for income range between ₹ 2.5 lakh and ₹ 5 lakh has been brought down to 5%, which has cheered many. This, coupled with the existing deduction available under section 80C of the act will ensure that individuals won’t have to pay any income tax up to an income of ₹ 4 lakh. Ironically, we may not know how much of such 80C deductions could be utilised by the low-income group taxpayers, but still the benefit stands, if the qualifying investments are made to avail the deduction under 80C of the act. Further, this budget also simplified the tax filing process as a one pager return for the salaried class up to a taxable income of ₹5 lakh without any business income. There is also the assurance of non-scrutiny in the case of first-time tax filers of the above class as a way to bring more people into the tax office. The deduction u/s 80CCD towards contribution to NPS has been increased by 20% in respect of self-employed persons from the present 10% which is also a welcome move.
With the use of analytics, the Finance Minister made an interesting observation that the effective tax rate of MSME is much higher than that of larger companies. This, in spite of the fact that these companies contribute immensely towards economic growth and employment generation. To give a big boost to the MSMEs to thrive in a competitive environment, the Finance Minister has proposed to reduce the tax rate of MSMEs reporting turnover of less than ₹50 crore to 25% from the existing 30%. He also made an assertion that this benefit covers 96% of the total companies in India that are filing tax returns. Also, in a drive to promote digital way of doing business, a lower rate of 6% from the existing 8% has been proposed to small companies having turnover less than ₹2 crore to the extent their sale proceeds are realised through banking channels. Similarly, the threshold for mandatory tax audit compliance has been raised to ₹2 crore, which would ease the compliance burden. All of these measures suggest that with this Budget, the government has sought to reward those honest and compliant tax payers – whether the common man or MSMEs – to ensure inclusive growth and development.
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